Busy Body/Gyms to Go to take on mid-Atlantic with gaps opened by Leisure and Omni

With the Leisure Fitness assets, both tangible and intangible, in a bit of a tussle over who can sell them or who should get them, Florida-based Busy Body/Gyms To Go decided not to wait.
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With the Leisure Fitness assets, both tangible and intangible, in a bit of a tussle over who can sell them or who should get them, Florida-based Busy Body/Gyms To Go decided not to wait.

Co-owner Carlos Vazquez has told SNEWS® that his company is not going to wait for the bank, Wilmington Trust Company (WTC), and the trustee for the U.S. Bankruptcy Court, District of Delaware, to figure out who gets what or who can sell what. He is negotiating leases to have two or three stores open by mid-November with five or six total stores open by the end of 2008 -- all with the support of his vendors.

"In a bad economy, these markets we are looking into, although not recession-proof, are recession-resistant compared to others," Vazquez said, pointing to the new president and his administration that will be moving into the area and the government jobs, diplomats and other related personnel that live and work there.

According to Vazquez, his competitor for the assets of Leisure Fitness, which suddenly closed all its 19 stores on Sept. 19 after it was hit by an involuntary Chapter 7 bankruptcy filing, was Ron Mendola. Mendola, of Key2Fitness and a former partner of Leisure Fitness, had formed a new corporation on Sept. 26, 2008 called LFI Holding LLC and was working with Leisure's former CFO and strategic advisor, Paul Bastianelli. Allegedly, the bank has already entered into an agreement with Mendola and LFI for the security interests for the assets. The bank had been looking to move forward as quickly as possible to sell assets, both the tangible such as inventory, and the intangible, such as domains and trademarks, before their value diminished further.

In a court hearing Oct. 23, the court has rejected Leisure's motion to dismiss the involuntary Chapter 7 filing, but didn't file that signed document stating as such until Oct. 27. Click here to see the latest SNEWS story on the Leisure case.

Vazquez, who had also put in a bid for the intangible assets including domains, telephone numbers, trademarks and the like, as well as some part of the leases, is still working with the court and talking to the bank although SNEWS has been told Mendola met with some former employees of Leisure on Monday evening, Oct. 27, informing them he now had control of the now-defunct business. Mendola was not available for comment and did not return several calls or emails.

But none of this is stopping Gyms To Go (GTG) partners Vazquez and Jon Larkin to keep moving. SNEWS was told leases for three stores in Tyson's Corner, Va., and Newark and Wilmington, Del., are being negotiated by the team with plans to open at least two in the next few weeks while discussions continue for stores in Annapolis and Rockville, Md. Meanwhile, the GTG group maintains its 18 stores in Florida and Georgia and is keeping its options open for moving farther north along the Eastern coast into New Jersey, New York and Pennsylvania, Vazquez said, to quickly fill in what may be gaps due to the additional Oct. 20 filing by Omni Fitness-parent FHI for Chapter 11 bankruptcy reorganization. (Click here for the most recent SNEWS story on FHI's case.)

If the GTG group doesn't get any Leisure Fitness spaces, the company plans to move in near where they were, Vazquez added.

"In the Tyson's Corner area (just outside Washington, D.C.), there is a diamond store that is No. 2 of its stores in the country ahead of Las Vegas, Nev., and Rodeo Drive (Beverly Hills, Calif.) and a close second behind Manhattan," Vazquez said as proof of the area's continued relative prosperity. "In this area, you won't see what you're seeing everywhere else."

Still, the GTG group will maintain smaller stores than Leisure's (about 2,000 to 2,800 square feet) to keep overhead lower. 

—Therese Iknoian

SNEWS® View: Where risk there is opportunity for those willing to grab it by the horns, it seems, and ride it out. Although other retailers are still battening down for what may be a longer recovery, the Florida-based Gyms To Go group is bullish as the election nears. There has most certainly been a gap created by the sudden closing of Leisure's 19 stores, which had been a respected part of the community, and as the bankruptcy reorganization filed by FHI, parent of both Omni in the east and Busy Body Home in the west, progresses, there could be even greater opportunities. Manufacturers losing retailers to reach the consumer will be shopping for new partners. SNEWS just hopes that everybody will enter any relationship with the long term in mind and not look simply for a stop-gap, ready to spring into the next arm's held open down the road. As the industry seems to be shattering, it's time for all to think harder about relationships that are win-win and give-and-take, rather than take-take. It's also time to rethink the way specialty fitness has mostly operated at retail, looking to smaller boutique stores and running them with a mindset of customer service. Indeed, if you're handed lemons, it's time to make lemonade. Those who survive and prosper will do that. 

—SNEWS Editors